Post # 1
Anyone do this? Is it even possible?
A friend of mine recently bought a house. They put 0% down because it was a VA loan. They pay less on their mortgage than we do for our rent. The one thing that has been holding us back on looking to buy is I don’t want to use up all of our savings for a down payment.
Also, are their any first time home buyer incentives out right now? The only one I’ve been able to find we don’t qualify for either because we make too much money.
I’ve talked with a few mortgage lenders but they only act helpful if you act like you want to buy right that second. Just curious on others experiences.
Post # 3
Depends on where you are located..
I know in Ontario (Canada) there is a first time home buyers incentive of.. 5%? maybe even 0% (cannot remember atm). However with CMHC & HST you would still end up paying a ridiculous amount.
Maybe try calling some local realtors or banks to see what the up to date incentives and rates are.
Post # 4
We’d buy in either Missouri or Illinois. We’ve gone to the bank before so I’m hesitant to go back without much more information.
Post # 5
I did! It was 5 years ago and the market was different but I have no regrets. The only problem is that if the housing market dips (like it did), you are upside down on your loan. Which means you owe more on the house than you’d be able to sell it for. This is only a factor if you plan to sell the home soon. If you plan to be in the home more than 7 years you should be OK. I would only recommend it if your jobs are VERY STABLE. I work for the federal gov’t so I was confident that I wouldn’t lose my job and find myself unable to afford the mortgage and having to sell in a bad market for less than what I owed. As for mortgage info I really like bankrate.com. A book that I always recommend for first time homebuyers is Automatic Millionaire Homeowner by David Bach. Ignore the cheesy title – it was really informative and easy and made me feel confident in buying my first home. We are supposed to close on our second property in a week! It can be a daunting process but it is made much easier if you know what to expect.
Post # 6
I don’t think its possible anymore unless you have a VA loan–FHA loans typically require 3.5% down, and you can borrow all of the closing costs from the seller or be gifted that money from somewhere else. Conventional mortgages require 5-10% down typically, and you can only recieve 3% in closing costs from the seller or gift funds. If you are interested in speaking with a mortgage broker, I would honestly start with a realtor. Stake out realtor.com and then contact a local realtor, let them know that your time frame isn’t immediate and they will normally hook you up with their own broker so that you can get pre-qualified. It doesn’t cost anything, and they can give you an idea of how much of a house you will be able to get into with xx.xx down. Homebuying can be just like planning a wedding, one minute it’s blissful, the next you are rolling on the floor throwing a temper tantrum! Enjoy it though!
Post # 7
@NJmeetsBX: Thanks for the info! I’m going to check out the book.
We plan on being in the home for as long as we can. I’m hoping our first home is our “forever home”. With the housing prices in the area we want it seems very possible that we’d get a great home for significantly less than what its worth. I’ve used mortgage calculators and from speaking with some loan officers it seems apparent we can afford a decent amount and pay almost the same as our rent.
Post # 8
My Fiance was in the marines so he’ll be getting a VA loan and paying 0 down on our house. I only have ever heard of 0 down with the VA loan though I’m not sure otherwise.
Post # 9
There is something called a USDA loan and it is 0% down but you have to be in specific areas (I have no idea what the locations are, sorry!) and I think some lenders/ banks have different things they can offer, for example we have some friends right now that are buying a house with an FHA loan but they are getting a grant for 3% of the down payment, it will bring their interest rate up by a quarter though, and only certain lenders are approved for this grant, so i would talk to some lenders and see what you can find out. Good luck!
Post # 10
@MrsPinkPeony: So we have tried doing this, first was with a USDA loan (which we qualified for) but the house was out in the boondocks. Seriously…a grocery store took forever to get to. So we ended up not getting that house…there is a map of area’s that qualify for USDA 0% down online somewhere…
Then we tried getting assistance on another house for the down payment but our annual income was too high (had to be under 70k). Then, we found out that there is another assistance program…but about 80% of the people who apply for it, get it.
So we are saving like crazy since we’ve made an offer on a house, it was accepted and we close in 40 days so we’re trying to come up with 3.5% for our FHA loan. If we get the assistance then all of our savings will just go into our emergency fund or something.
ETA: our lending officer has told us there are a ton of options out there for 0% down but there are some loop holes. Sit down with a lending officer (one that has a good reputation) and discuss your options. There are always options.
Post # 11
I don’t think it’s possible unless you have a VA loan. I know with an FHA (which we were strongly considering getting, but didn’t because we didn’t want PMI), we would have had to put 3.5% down. We ended up going a conventional loan route and putting 5% down. Interest is a little higher, but no PMI!
Post # 12
@Treasure43: How did you avoid PMI without putting 20% down?
Post # 13
Look into your state grant programs. Here in Ohio we found out that there was a grant for first time home owners that would provide us with 2.5% of the cost of a house (the house had to be less than X and you couldn’t make more than X) there was also one for recent college grads that basically was the same thing. The rest of the loan is like an FHA so we only have to come up with another 1% to cover the cost of the down payment. It is really working out well for us. We had no idea such a program existed until we went to look into building and they told us about it. I would do some digging and talk to whomever you need to see if your state offers such programs.
Post # 14
The way to avoid PMI usually involves having a second mortgage after the first mortgage of 80%.
We aren’t doing less down on our loan because we don’t want to deal with the hassle and with housing being so shakey, I would rather have some money in a home.
Post # 15
We’ve looked into a few different loans. Most require 3.5% down, some 10%. If your credit is really good, you may be able to qualify for something like this. It doesn’t hurt to research it.
Post # 16
OP, I’m sure all of this is confusing! Get the book! It explains it all in plain language and allows you make the best the decision for your situation. For me, a second mortgage to avoid PMI wasn’t favorable. I wasn’t comfortable with having an adjustable rate. But only you can make these decisions for your personal preferences and situation. Keep in mind there are additional expenses to buying a home aside from closing costs and down payment (all in the book).
ETA: For this second property, I went with an FHA loan, putting 3.5% down and seller paying 3% of the sales price towards closing. This made the deal manageable for me.